The above picture is one of my favourite performers of all time singing “it’s gonna be me” which has been memed to death because it actually sounds like he is singing “it’s gonna be May”. This has gotta be the most posted picture on April 30th every single year. Justin Timberlake, you’re the man, and you are correct, it is May.
I hope that everyone enjoyed what turned out to be a fantastic weekend weather wise, just enough rain to get the grass going, and some nice warm temperatures. We took a little trip this past weekend to see a new model home in Thorndale (Arden enjoyed that for about 3 minutes) and we passed Heeman’s on the way. Suffice it to say, there were plenty of folks taking the nice weather as a sign to get in gear and tackle some landscaping/lawncare activities.
I’m a weirdo so I was cutting new garden edges in February and my landscaping/lawncare duties are pretty much done. You wouldn’t catch me dead in that parking lot which I have never seen so full, forget the overflow parking in the farm next door. I hope those folks got the plants they were looking for.
Over the weekend, you might have chanced across the London Free Press’ market report write up for April, maybe you even caught it late last week, because they wrote and posted that story before any of the official data had been released! LSTAR and Realtors across the city were pissed, I thought it was funny. But it reminded me of why I called these monthly reports the REAL market report. Because traditional media outlets like to report on false facts and create narratives that sell newspapers or get clicks.
If you read that article, you might think that the market is in the toilet and that homebuyers have fled the country. While that might be true in some small cases (who isn’t fantasizing about absconding to some far reach of the world where the evil carbon tax can’t get you) it is not indicative of the reality we currently face.
Sales were low. Very low. The lowest in fact. We will just get that out of the way. Only 476 sales in the month of April this year, one higher than March (which I think is kinda funny) but fewer than last year and about 25.75% lower than the 10 year average.
The Free Press alludes to a BMO survey that states 72% of homebuyers are waiting for interest rates to come down before they buy. I think that number is high, and I generally don’t trust these surveys to begin with, but it speaks to the sentiment of a lot of homebuyers right now.
Here’s what I don’t understand though: if you expect rates to drop, don’t you also expect home prices to increase? I’ve made this argument a million times, it’s just simple math. Buying a cheaper house with a higher rate makes more sense than the opposite when you consider the principal owed at the end of your typical 5 year term. Also, if you expect home prices to increase, would you not like to ride that wave so to speak?
What if interest rates don’t come down? It’s a hypothetical that I believe is worth considering. Just never buy?
New listings last month were a different story and they were perfectly in line with our 10 year average. 965 new listings and 96% of the 10yr average. Let’s do some quick math here: new listings were considerably higher than sales. Our sales to new listings ratio was 49.3% which is about as “balanced market” as you can get.
The next revelation here is if you have more homes coming to market than are selling, you should have increasing inventory available on said market. That too is true! At the end of April there were 1326 homes available in London. For context, that is the highest total at the end of April since 2016 and is the 4th highest inventory level at the end of any month in the last 8 years.
It would not be inaccurate then, to say that homebuyers in April of 2024 have more choice than in any recent spring market. It just doesn’t feel that way, at all, when you are out there looking at homes with buyers.
In reality, in the busy parts of the market (under 800k, especially under 600k) there are few homes to go to many buyers. There is often competition. At the very least, attractive homes that are well priced are selling in far fewer days. So in practice, it doesn’t feel remotely close to the balanced or buyer’s market that the above stats might indicate.
Average days to sell last month was 24, down from 25 in March and 34 in February. That is far from a slow market in my opinion.
And the final piece of the puzzle: price. I think you could easily make the argument that prices should have fallen last month based on our discussion so far. But again, in reality, the market is humming along. The average sale price in April was $646,125 in London. A small increase from March, but a strong showing nonetheless.
At this point I can say that home sellers are certainly winning the battle for the market. There is no desperation or fear from home sellers, that I am experiencing. They too seem to be content to hold off until rates drop to do anything, if they plan to at all.
Call this a wait and see month, very much like March, with both sides of the fence feeling it out. I’m curious to see if May will show any last minute surge from the buyer side of things in anticipation of the June rate announcement. Maybe if we get some leading economic reporting before then.
See you next month!
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